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Global imbalances, triangular trading patterns, and the yen/dollar exchange rate

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  • Thorbecke, Willem

Abstract

Trade imbalances between Japan and the U.S. could cause the yen to appreciate against the dollar. Evidence presented here indicates that this could increase the U.S. trade deficit with Japan. An appreciation of the yen against the dollar would also cause the yen to appreciate against the RMB and other currencies in East Asia with heavily managed exchange rate regimes. Results reported here indicate that this would reduce the flow of capital and intermediate goods from Japan to East Asia, forcing firms to economize on sophisticated technology-intensive inputs that are difficult to procure elsewhere. This problem would be mitigated if countries in developing Asia adopted more flexible exchange rate regimes. J. Japanese Int. Economies 22 (4) (2008) 503-517.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of the Japanese and International Economies.

Volume (Year): 22 (2008)
Issue (Month): 4 (December)
Pages: 503-517

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Handle: RePEc:eee:jjieco:v:22:y:2008:i:4:p:503-517

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Web page: http://www.elsevier.com/locate/inca/622903

Related research

Keywords: Japan Yen/dollar exchange rate Global imbalances Triangular trading patterns in East Asia Exchange rate elasticities;

References

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  1. Leamer, E. & Levingsohn, J., 1994. "International Trade Theory: The Evidence," Working Papers, Research Seminar in International Economics, University of Michigan 368, Research Seminar in International Economics, University of Michigan.
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  6. Leamer, Edward E, 1983. "Let's Take the Con Out of Econometrics," American Economic Review, American Economic Association, American Economic Association, vol. 73(1), pages 31-43, March.
  7. Kei-Mu Yi, 2000. "Can vertical specialization explain the growth of world trade?," Staff Reports, Federal Reserve Bank of New York 96, Federal Reserve Bank of New York.
  8. Bewley, R. A., 1979. "The direct estimation of the equilibrium response in a linear dynamic model," Economics Letters, Elsevier, Elsevier, vol. 3(4), pages 357-361.
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  10. Guglielmo Maria Caporale & Nikitas Pittis, 2004. "Estimator Choice and Fisher's Paradox: A Monte Carlo Study," Econometric Reviews, Taylor & Francis Journals, Taylor & Francis Journals, vol. 23(1), pages 25-52.
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Citations

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Cited by:
  1. Veysel Avsar & Kemal Turkcan, 2013. "Exchange Rate Volatility and U.S. Auto-Industry Exports: A Panel Cointegration Approach," International Journal of Economics and Financial Issues, Econjournals, Econjournals, vol. 3(4), pages 772 - 787.
  2. Thorbecke, Willem, 2014. "The contribution of the yen appreciation since 2007 to the Japanese economic debacle," Journal of the Japanese and International Economies, Elsevier, Elsevier, vol. 31(C), pages 1-15.
  3. THORBECKE, Willem, 2008. "The Effect of Exchange Rate Volatility on Fragmentation in East Asia: Evidence from the Electronics Industry," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 08016, Research Institute of Economy, Trade and Industry (RIETI).
  4. Andrea Fracasso & Stefano Schiavo, 2009. "Trade-imbalances networks and exchange rate adjustments: the paradox of a new Plaza. The XIVth Spring Meeting of Young Economists (SMYE-2009), Istanbul, April 2009," Sciences Po publications, Sciences Po info:hdl:2441/10028, Sciences Po.
  5. Willem Thorbecke & Atsuyuki Kato, 2011. "The Effect of Exchange Rate Changes on Japanese Consumption Exports," Trade Working Papers 23238, East Asian Bureau of Economic Research.
  6. THORBECKE, Willem, 2009. "Can East Asia be an Engine of Growth for the World Economy?," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 09006, Research Institute of Economy, Trade and Industry (RIETI).
  7. THORBECKE, Willem, 2012. "Estimating Trade Elasticities for World Capital Goods Exports," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 12067, Research Institute of Economy, Trade and Industry (RIETI).
  8. repec:spo:wpecon:info:hdl:2441/10028 is not listed on IDEAS
  9. Nobuaki Hamaguchi & Silvio Miyazaki & Leonardo Correia, 2014. "State Space Application to Recent Automobile Sector Triangle Trade between Japan and Latin America," Discussion Paper Series, Research Institute for Economics & Business Administration, Kobe University DP2014-05, Research Institute for Economics & Business Administration, Kobe University.

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